Enbridge Inc. Raises $0.5 Billion through Secondary Offering of Enbridge Income Fund Holdings Inc. Shares; Achieves Previously Announced Asset Monetization Target
Enbridge Inc. (TSX:ENB) (NYSE:ENB) (Enbridge or the Company) announced today that it and Enbridge Income Fund Holdings Inc. (TSX:ENF) (EIFH) have entered into an agreement with a syndicate of underwriters (the Underwriters) led by BMO Capital Markets, CIBC Capital Markets and Scotiabank, pursuant to which the Underwriters have agreed to purchase, and Enbridge has agreed to sell, on a bought deal basis, 15,085,000 EIFH common shares (the Common Shares) at a price of $33.15 per Common Share (the Secondary Offering Price) for distribution to the public, for gross proceeds to Enbridge of approximately $0.5 billion (the Secondary Offering). The closing of the Secondary Offering is expected to occur on or about April 18, 2017.
The Underwriters have also been granted an option to purchase up to an additional 2,262,750 common shares of EIFH from Enbridge at the issue price to cover over-allotments, if any. If exercised in full, Enbridge will receive additional gross proceeds of approximately $75.0 million. The over-allotment option is exercisable, in whole or in part, by the Underwriters at any time up to 30 days after the closing of the Secondary Offering.
The proceeds of the Secondary Offering will initially be used by Enbridge to pay down short-term debt, pending reinvestment by Enbridge in its growing portfolio of secured projects. In September of 2016 at the time of the announcement of its merger with Spectra Energy Corp, Enbridge also announced its intention to divest or monetize up to $2.0 billion of assets over the ensuing 12 months to further bolster its financial strength and flexibility. To date, the Company has raised, enterprise wide, approximately $1.7 billion through the sale by the Fund Group (made up of Enbridge Income Fund, Enbridge Commercial Trust and Enbridge Income Partners LP) of the South Prairie Region liquids pipeline assets and the divestiture of other assets and investments. With the completion of this Secondary Offering, the Company will have more than achieved its previously announced monetization target.
Immediately prior to the closing of the Secondary Offering, Enbridge will exchange ordinary units of Enbridge Income Fund for an equivalent amount of common shares of EIFH. In order to maintain its 19.9 percent interest in EIFH, Enbridge will retain a portion of the common shares issued pursuant to such exchange and sell the balance under the Secondary Offering. EIFH will not receive any proceeds from the Secondary Offering and Enbridge will pay all expenses and fees associated with the offering. Upon completion of the Secondary Offering, Enbridge's economic interest in the Fund Group will be reduced from 86.9 percent to 84.9 percent (84.6 percent if the over-allotment option is exercised in full).
"This transaction is expected to be neutral in 2017, but increasingly accretive to Enbridge's ACFFO/share over the Company's planning horizon," said John Whelen, Executive Vice President and Chief Financial Officer. "It accomplishes two important strategic initiatives. First, it enables us to more than achieve the asset monetization target we announced last fall, earlier than planned, bolstering the balance sheet and positioning the Company to grow post combination with Spectra Energy Corp. Second, it furthers our previously communicated objective to gradually increase the public's economic interest in the Fund Group to approximately 20 percent over time and increase EIFH's public market capitalization and trading liquidity. The sale of the South Prairie Region assets late last year was more than sufficient to meet the Fund Group's equity financing needs through the end of 2017.
With its near term equity requirements taken care of, EIFH had additional capacity to accommodate a secondary offering by Enbridge this year."
Going forward, Enbridge will continue to hold a very significant economic interest in the Fund Group which holds key assets within the larger Enbridge asset portfolio. The Company is not contemplating any further secondary offerings of EIFH shares at this time and expects that the public's interest in the Fund Group will grow to the communicated 20 percent target over the medium term planning horizon as EIFH raises equity from the public to fund the secured capital program being undertaken by the Fund Group.
This news release does not constitute an offer to sell or a solicitation of an offer to buy the Common Shares in any jurisdiction. The Common Shares offered have not been registered under the United State Securities Act of 1933, as amended, and may not be offered or sold within the United States.
SOURCE: Enbridge Inc.
The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.